Floridians' consumer confidence drops amid 'fiscal cliff' concerns

Floridians' consumer confidence fell in November after rising to five-year highs the previous two months, according to a University of Florida survey released Tuesday.

Blame the confidence drop on the election and worries that Washington won't come to an agreement to avoid the so-called “fiscal cliff,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.

Confidence fell sharply among Republicans while Democrats were feeling slightly more confident this month, according to his analysis.

"Florida was the most divided state in the country, with President Obama winning by 73,309 votes. No matter who won, half of the state was not going to be happy with the outcome," McCarty said.

The survey also shows Floridians' concern over the "fiscal cliff" if scheduled federal tax increases and government spending cuts occur in January -- that result in layoffs and sharp tax hikes, he added.

Floridians "are not very optimistic that it will be solved. We have a little more a month -- really a couple of weeks. But they don't see anything being solved," said Jorge Salazar-Carrillo, an economics professor who directs the Center of Economic Research at Florida International University.

There’s a "clear danger" to the economy if Washington doesn’t come to an agreement, warns economist Sean Snaith of the University of Central Florida in his final U.S. forecast for 2012 released Tuesday.

For now he is still projecting the South Florida economy – as well as the entire state – will grow in the first three month of 2013. But he said he might have to revise that if Washington doesn’t come to an agreement.

"There are still a lot of unknowns even though the election is over and we know who won," Snaith said, citing the ongoing European economic crisis and the implementation of the new U.S. healthcare law.

Other economists have warned of a recession if the fiscal cliff isn’t averted. Earlier this month, Federal Reserve Chairman Ben Bernanke called on Congress and the Obama administration to agree to a budget deal to avert all the tax increases and spending cuts that he warned could trigger a recession.

Despite Floridians’ concern over national issues, the state's consumer confidence remains near five-year highs -- significantly higher than it was during the Great Recession and much of the recovering months, McCarty said. In that way, the state is like the rest of the country with U.S. consumer confidence rising this month to an almost five-year high, according to the nonprofit Conference Board that conducts national consumer confidence polls.

This month, the Florida consumer confidence tally fell to 76, down four points from the revised October reading of 80, the UF survey found.

Four of five components used in the survey declined. Respondents’ overall view that they are better off financially than a year ago fell. So did their expectations that their personal finances will rise by this time next year. Floridians' confidence in U.S. economic conditions also dropped -- both over the next year and in the next five years.

"Only one component showed no decline," McCarty said. Perhaps because of the holiday season and widespread sales, Floridians said now remains a good time to buy an expensive consumer item such as an appliance.

McCarty said he expects holiday sales to increase a modest 2 percent as predicted by the Ball State Center for Economic and Business Research.

The UF survey of 420 Floridians was conducted from Nov. 12 to 21.

The index used by UF researchers is bench-marked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.